Monetary Snapshot - September 13, 2007

The Indian rupee paused in its push towards nine-year highs on Thursday, held mostly steady by a combination of suspected central bank intervention and dollar purchases by oil refiners, traders said. The partially convertible rupee ended at 40.45/46 per dollar, just weaker than Wednesday's close of 40.4475/4550.

"The central bank seems to be defending the 40.40 level, but we are seeing plenty of dollar supplies. So, it seems they would not be able to hold the rupee around this level for long," the chief dealer with a private bank said.

On Wednesday, the Reserve Bank of India said it had bought $11.43 billion in intervention in July -- the month the rupee hit a nine-year high of 40.20 against the dollar. The central bank bought $38.1 billion in intervention in the first seven months of this year.

Traders said there was heavy dollar buying by oil firms to make import payments as oil traded near $80 a barrel. Oil is India's biggest import, and rising prices raise the risk of a wider trade deficit.

Traders expect the rupee to rise in the coming days, helped by a pick up in capital inflows. Foreigners bought nearly $780 million of local shares in the first seven days of September, taking net purchases this year to more than $9.1 billion.

The different macro economic monetary indicators

• Bank Rate (Currently this rate, which is that rate at which the RBI lends overnight money to commercial banks ) : 6.0%
• Repo Rate ( The repo rate is the rate at which the RBI borrows from the banks) : 7.75%
• Reverse Repo Rate (The reverse repo rate is the rate at which banks park their short-term excess liquidity with the RBI): 6.00%
• Call Rates (rate of inter-bank call money market where banks borrow funds to meet their RBI reserve requirements) : 5.25% - 6.15% (previous day)
• CRR (Indian banks are required to hold a certain proportion of their deposits as cash. This ratio is stipulated by the RBI ): 7.00%
• SLR (It is the amount which a bank has to maintain in the form of cash, gold or approved securities. The quantum is specified as some percentage of the total demand and time liabilities of a bank. This percentage is fixed by the Reserve Bank of India. ) : 25.0%
• PLR ( The Prime Lending Rate is the interest rate charged by banks to their most creditworthy customers. This rate is fixed by RBI) : 12.75%-13.25%
• Savings Bank Rate (Interest rate given on savings bank deposits) : 3.5%
• Deposit Rate (Interest rate paid on deposits with the banks) : 7.50%-9.60%

Exchange Rates as on 13-09-2007

INR / 1 USD : 40.4400
INR / 1 Euro : 56.2000
INR / 100 Jap. YEN : 35.3800
INR / 1 Pound Sterling : 82.0100

Source: The Economic Times, RBI